Managerial versus policy implications of the zero-price effect

Managerial versus policy implications of the zero-price effect

Anna Kiszely -
Number of replies: 0

In Shampanier et al. (2007), the authors mainly draw business/managerial conclusions from the confirmation of the zero-price effect, such as considering promotions with zero price and suggestions for the pricing of products with multiple components. In the meanwhile, they argue that it is not the disappearance of the market logic which causes the zero-price effect (if negative price is mentioned, the effect will still be relevant, even though there is market logic applied). 

However, from a policy-making perspective, we may want to draw different conclusions from this effect, possibly preventing the above mentioned exploitation of this effect at the consumers' price: I would be interested to see how policies can act to do this. Furthermore, can there be a socially beneficial implication of the zero-price effect, for example in the case when the social norm mechanism is more relevant? 

Maybe a clearer distinction in the consumers' mind about when a zero price is just a marketing strategy and when it is a result of non-market logic could help in choosing the consumption levels and demand more optimally.